The Dwindling Taxable Share Of U.S. Corporate Stock, written by Steven M. Rosenthal and Lydia S. Austin, analyzes the available data regarding the ownership of corporate stock in the United States. Over the history of the income tax, most business capital has been invested in corporations, so an assumption that the income taxation of business meant income taxation of corporations was a reasonable assumption. Similarly, most owners of domestic capital were assumed to be taxable individuals. ...

Rosenthal and Austin presented their work primarily to address the integration debate. Their work provides support for those who would push shareholder taxes in (even if this means eliminated some shareholder preferences) rather than pushing corporate taxation out, and relying on shareholder taxation. But their work has done something equally important, in showing how little we actually know about the taxation of business income. They did not attempt to unpack the corporate side of the historical assumptions. But it prompts a series of questions including the extent of investment made entirely outside of corporate entities, and the amount of investment made nominally through corporate entities but which is in fact under the control of entities in partnership with such corporations. These corporate-side questions present equivalent challenges to old assumptions about the nature of business taxation.

Rosenthal and Austin have made the work of those analyzing the taxation of business income in the US much harder. But that is a good thing, if it results in a disruption of the old approaches to integration and corporate reform more generally.